Sri Lanka state banks most in need capital for Basel III, new risk identified
May 30, 2018 15:00 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka's large banks need 19 billion rupees more to meet Basel III capital adequacy in 2019, with state banks accounting for 72 percent of the shortfall, Fitch, a ratings agency said.
A risk has also been identified for the capital of state banks, in the wake of dividends demanded from the banks to reduce budget deficits in recent years without following a dividend policy.
"Sri Lankan state banks are the most in need of capital," Fitch Ratings said. "Their capital levels are vulnerable to dividend demands from the state."
"The state banks' ability to raise capital is in certain instances also constrained by limitations placed on them through the respective acts that govern their establishment."
Large Sri Lankan banks have already raised about 42 billion rupees of capital.
Commercial Bank of Ceylon PLC had raised 10.1 billion rupees, Hatton National Bank 14.2 billion rupees, and Sampath Bank 20 billion rupees.
State-run People’s Bank (Sri Lanka) (AA+(lka)) and Bank of Ceylon have got a 5 billion rupee capital infusion from the state. (Colombo/May30/2018